Archive

Nathan Lott continues his coverage of the EU-Turkey issue. I’d like to over the relatively optimistic view that, disappointing though the outcome was, even a ‘date for a date’ will be hard to break. Europe’s leaders will be forced either to confront xenophobic anti-Muslim sentiment or cave in openly. And, as far as Turkey is concerned, it’s hard to see them spitting the dummy at this point, and the only reasonable response is to push ahead with much-needed improvements in human rights. Nathan suggests his post will be the last for a while on this topic, and barring big news, the same is true for me.

A while ago, I asked whether Strom Thurmond had conceded that he deserved to lose in 1948. According to this piece by Timothy Noah the answer is no. He says

The legend of Strom’s Remorse was invented, by common unspoken consent within the Beltway culture, in order to provide a plausible explanation why Thurmond should continue to hold power and command at least marginal respectability well past the time when history had condemned Thurmond’s most significant political contribution

. Noah suggests that Thurmond made a few token gestures like hiring black staff, and was promptly given a free pass by the bipartisan Establishment.

William Safire seems to specialise in making counterproductive suggestions. A little while ago, it was his suggestion that a tame post-Saddam government would repudiate Iraq’s debts to any countries that were not enthusiastic supporters of the US. Now it’s his plan to interrogate Iraqi scientists outside the country. He says

Draw up his own list – the names and addresses of the leading 50 scientists are no secret – and then go and knock on their doors. Ask them to step into a helicopter, with families if desired, and transport them to a safe house outside the country for questioning.

The first interviewee should be obvious to longtime readers of this space: Rihab Taha, “Dr. Germs,” the British-trained biologist who has been running Saddam’s anthrax and botulism laboratories for nearly 20 years. In the mid-90′s, when a U.N. inspector caught her in a flat lie, she replied, “It is not a lie when you’re being ordered to lie.”

Would Dr. Germs and her oil-minister husband tell the truth now, if spirited out of Saddam’s circle? Unlikely; but if told their secret cooperation might ameliorate sentences at war-crimes trials, they might discreetly provide a few leads. Same with the smallpox virologist Hazem Ali, the anthrax expert Abdul Nassir Hindawi, the nuclear physicists Jaffar Dhia Jaffar and Mahdi Obeidi, all named in The Washington Post yesterday.

Even if these scientific Saddamites hang tough, such off-site interrogation of supposed Saddam loyalists would give cover to other Iraqi scientists

If I was an Iraqi scientist reading this, I can’t say I’d be keen to get on any helicopeters.

The news that National Express, the main provider of privatised public transport services in Victoria is to walk away from its contract with two weeks notice follows a similar pullout in South Australia by bankrupt electricity generator NRG only a week ago. In both cases, Labor governments have been left to pick up the tab for deals done by their Liberal predecessors. This may help to wean them off the bipartisan assumption that privatisation is the best way to deal with government services.

More significantly, these episodes underline the point that, for essential services, government is the provider of last resort. It can sell the assets, and forgo the associated earnings, but it can’t divest itself of the obligation to step in (and pay up) when something goes badly wrong.

Until now, North Korea has appeared in the blogosphere mainly as a debating point. Right-wingers have used the North Korean government’s breach of its agreement not to develop nuclear weapons as a club with which to beat Jimmy Carter and Bill Clinton who made the deal with Kim-Jong Il. Opponents of war with Iraq (including me) have pointed to the differential treatment accorded to this highly unattractive member of the “Axis of Evil’ as evidence that the US Administration either lacked a coherent policy or was not being honest about its motives.

Unfortunately, there are no appealing options in this case. It seems clear that the co-operation, or at least acquiescence of the Chinese government is going to be needed, and that any military option raises a severe risk of an attack on South Korea and perhaps Japan. The most promising solution is one where China applies the pressure required to force the abandonment of North Korea’s nuclear program and its missile development. The amount of pressure required will be large, and the diplomatic price correspondingly high. Unlike Saddam, Kim Jong-Il cannot be regarded as a rational bargaining partner – he and his father have pursued policies that have driven their kingdom into the ground, and, while it’s impossible to tell anything about such a closed society, it’s hard to believe he has a secure hold on power.

China could probably bring the regime down by opening its border. Even with tight controls on both sides there’s a steady flow of refugees with as many as 300 000 now hiding out in China), but this would be a hugely costly and problematic step. South Korea would have to accept most of the refugees and they would be highly reluctant to do this.

I find the prospect of a deal with the Chinese Communist Party even more worrying than than the deal with Musharraf that was needed to secure Pakistan’s overthrow the Taliban, or the various trade-offs that will be required in any Middle East deal. The partners in those deals are tinpot dictatorships that can safely be dumped when they are no longer needed. By contrast, China represents the only dictatorship left among the great powers (or even the second-rank powers) and its rulers have demonstrated a surprising capacity to handle succession problems. The Chinese government is the most important single enemy of democracy in the world today.

But there may be no alternative to a deal. Some juicy carrots will have to be offered, but if Bush has the moral clarity he claims to have he shouldn’t be afraid to show the stick as well. If the Chinese government is prepared to give aid and comfort to the Dear Leader Kim Jong-Il and his insane plans, they should be given the cold shoulder in every respect, starting with Most Favored Nation treaties.

Having taken this hard line, I have to say that, even more than with respect to Iraq, this is an issue where discretion is the better part of valour for Australia. We’re not as vulnerable as South Korea and Japan, but we are still mice in the cornfield when it comes to hard words between elephants like the US and China.

Whereas I’m still relatively optimistic about some sort of reasonable outcome in relation to Iraq and even Al-Qaeda, this business fills me with foreboding.

Yet again, it’s time for the thoughts you’ve been accumulating over the weekend to be spread before the select audience of Quiggin blogreaders. Anything goes, but the question that’s been worrying me for the last few days is “What is to be done about North Korea?”. I’ll be posting on this soon, so you may want to comment when I do, but if you’ve got a brilliant plan, I’d love to see it.

This piece from the Oz discusses divisions within the US Administration over whether to release intelligence information. The story is attributed to the Sunday Times, but I couldn’t find it at their site. The discussion is pretty much identical to my posts of last week, which Ken Parish dismissed as ‘ridiculously premature’. On the assumption that bloggers are entitled to be more speculative than mainstream media like The Times, and that no-one wants to read blog speculation that lags what’s already in print, I’d say I published just in time. Here’s the Oz

Washington’s apparent reluctance to produce what it has claimed is “solid” evidence of Iraqi transgressions has fuelled speculation that the intelligence is flawed or owes more to propaganda than genuine information.

Scepticism has been fuelled by uneventful inspection visits to several nuclear and biological sites that were previously identified as suspect by the US or Britain. UN officials have so far not disclosed any serious irregularities. British officials admit the intelligence they have seen is not as dramatic or as easy to publish as the satellite photos that exposed the presence of Soviet missiles in Cuba.

“The evidence is assembled from random bits and pieces, quite a lot of which cannot be explicitly revealed,” an official said. “It adds up to a picture we are confident of.”

The Oz observes

Spreading that confidence to a wider public is beginning to prove a problem

In my link to Electrolite I wrongly described it as a joint project of Patrick & Teresa Nielsen Hayden. Actually, it’s just Patrick. Teresa has her own blog, devoted to ” Language, fraud, folly, truth, history, and knitting. Et cetera.” Check out yet another online quiz, a better-than-average one about Science fiction writers

This piece on unpaid overtime gives more support to my view that the alleged boom in productivity in Australia is largely driven by increases in the pace of work and by unrecorded increases in working hours.

The NYT has an interesting interview with Jeffrey Sachs who’s moved his sphere of concern from Eastern Europe (where he was a prominent advocate of ‘shock therapy’) to the Third World, where he is pushing with some success for more, and more effective, aid programs particularly with respect to AIDS and malaria.

I mentioned The Economist’s praise for the US system of Chapter 11 bankruptcy a few posts ago. This close-up look from the NYT doesn’t go so far as to deny the superiority of the US approach, but it is certainly a more jaundiced view.

The NYT also mentions an auction-based proposal by well-known economists Hart and Moore. Auctions are where the action is in economics nowadays, and I am edging into the field myself.

I’ve mentioned before that Ozplogistan is more politically balanced than it was in ancient times (that is, June 2002). Two additions to the blogroll maintain the balance. Stewart Kelly is generally left of centre, while the self-explanatory Wog Blog is generally right of centre.

On the US scene, I’ve already linked to Patrick & Teresa Nielsen Hayden’s excellent Electrolite, and now I’m adding them to the blogroll.

And I should mention that David Morgan is back, after a prolonged absence due to new fatherhood. He’s had some excellent posts on the Windschuttle-Reynolds row recently.

The Lovely Bones by Alice Sebold. Weird, but moving, it’s narrated from heaven by a 13-year old murder victim.

Also England Under the Tudors by GR Elton, reprinted in the Folio History of England series. Some striking numbers are that the population of England at the time was around 3 million and that the King’s annual revenue was less than 100 000 pounds. Here are some thoughts on this.

(a) Given that 80 or 90 per cent of the population were peasants who had no real chance of an education, the pool from which English governments drew their talent was smaller than that available to a lot of city councils in Australia. Did this make a difference?

(b) Estimating Mr Darcy’s income, Brad DeLong says, with suspicious precision, “In 1810 the pound had a present-day value of £27.28″. As I recall there was a fourfold inflation following the discovery of the New World goldmines, so lets say that the price level has risen 100-fold since Tudor times. This gives a government budget of around 10 million pounds per year or $30 million Australian dollars, which is less than it costs to run a medium-sized university.

CHEAP STAPLES: I bought a five pound bag of Gold Medal flour yesterday for 69 cents. I find that amazing.

to estimate a 400-fold improvement in standards of living since the 16th century.

Over 500 years, this would imply a doubling time of around 60 years or, using the rule of 70, an annual growth rate in income per capita of about 1.2 per cent . I think this overstates things a bit because the relative price of food has been declining at least for the past century, suggesting more rapid productivity growth in agriculture than in the economy as a whole. However, some of the price decline is due a lower income elasticity of demand reflecting the finite capacity of the human stomach – the treatment of this is complicated.

In the comments thread to my post on the Lott fiasco, Jason Soon raised an interesting issue (I think I saw a similar point in another blog somewhere, but omitted to link it. )

Does Strom Thurmond himself think America would be a better place if he had won in 1948? It would certainly raise my opinion of him if he came out and said without equivocation that he deserved to lose.

This report in the NYT is notable, not for its content but for the fact that it’s the first time I’ve seen the Times use the term “current account deficit” without some explanatory gloss such as “the broadest measure of the trade deficit”. The NYT is not alone on this – the only other paper I’ve seen even report CAD statistics is the WSJ and it usually has a gloss.

For Australian readers of a certain age, the rise to prominence of the CAD will be all too familiar. The high interest rates of the late 1980s and the ensuing recession were largely motivated by concern about the CAD, though every historical point is bitterly disputed. Even today, no Australian tabloid would have any qualms in reporting the CAD and assuming its readers had a general idea what it was.

As this report from the Bureau of Economic Analysis shows, the CAD is now at 5 per cent of US GDP and shows no sign of declining, despite the recent deprecation of the dollar. Although economists are more relaxed about deficits than they were a decade ago, this is still dangerous territory.

One reason US commentators have ignored the CAD is the fact that, although the US is a net debtor, the deficit on income payments is still quite small – only $3 billion in the last quarter. So the CAD is not much different from the balance on goods and services. But with deficits at 5 per cent of GDP, the magic of compound interest will start to work before long. Expect to see this statistic make the move from the business pages to the front pages in the near future.

Jason Soon has an interesting link to an interview with Arthur Jensen, a leading hereditarian and advocate of the idea that intelligence is dominated by a single ‘g’ factor. It struck me that, although Steven Pinker gives generally favorable references to Jensen, this is the exact opposite to the Cosmides-Tooby idea of intelligence as a ‘modular’ bag of tricks which Pinker strongly supports.

This lead to me to another thought – an egalitarian implication of evolutionary psychology that I don’t think has been noticed before. Hereditarians like Jensen, Herrnstein & Murray etc argue that some people have ‘better genes’ than others – superior intelligence, greater physical strength etc. and that these advantages seem to be positively correlated.

But strong versions of Darwinism imply (roughly speaking) that evolution proceeds so rapidly that, most of the time, animals are optimally adapted to their environments. This involves trade-offs, and when the environment changes,so do the optimal trade-offs. In humans, intelligence is clearly the biggest single concern, and if you buy the Cosmides-Tooby story, you’d expect to see some environments favoring more allocation of resources to the spatial module, others to the interpersonal module and so on. (A nice feature of this argument is that it doesn’t rely on any particular hypothesis about the environments in which humans evolved, only that they varied and the variations made different demands on intelligence.)

This leads to the conclusion that insofar as ability is determined by genetic endowments, ability in one area should be negatively correlated with ability in others. This is a standard feature of popular ‘folk’ psychology, which assumes, for example, negative correlations between math ability and interpersonal skills. In my case, it’s pretty clear that whatever environment shaped my genes, it didn’t place a lot of weight on fine motor skills.

Glenn Reynolds and other warbloggers are desperately unwilling to give up the phrase ‘objectively pro-Saddam’ to describe their opponents even after it’s been pointed out to them that George Orwell, from whom they took it, later repudiated it as dishonest.

In a series of thoughtful posts, Sasha Volokh and Josh Chafetz attempt to find an alternative formulation that doesn’t carry the dishonest imputation that opponents of a war with Iraq actually support Saddam, but end up reaching the conclusion that there isn’t one. Along the way, they try out ‘plays into the hands of”, another locution that Orwell exposed as a pretext for dishonesty, and then ‘pro-Saddam in effect, if not in intent’.

Volokh settles on:

How about just “anti-war protesters help Saddam”? “Pro-X,” no matter how you qualify it, still connotes that you agree with X’s agenda.

I think this is fair enough, but once we have reached this point, the obvious question is “So What?”. Harming (or not helping) Saddam might be a good thing, but as a ground for war it’s pretty thin. In any case, it has been specifically rejected by the Administration, which has not only repudiated the International Criminal Court, but intimated that it would not look too hard for Saddam if he left office of his own volition. We should be assessing policies on the basis of whether they are good or bad for us and the world, not whether they are good or bad for Saddam.

The basic point of most opponents of war with Iraq is that the costs are likely to outweigh the benefits. Reynolds and most other warbloggers hold exactly this opinion in relation to North Korea, yet refuse to accept the parallel even when it’s pointed out to them. In fact, Reynolds and others have been at pains to play up the dangers of an attack on North Korea so as to rebut claims of inconsistency in the Administration’s policy. Their arguments that North Korea is too tough a nut to crack are obviously helpful to Kim Jong-Il in exactly the way as warnings about body bags and the possibility of chaos in the Middle East are helpful to Saddam.

Coming back to Orwell, it’s reasonable to ask why this kind of phrase is being used now. I suggest it’s because it is becoming increasingly necessary to ignore inconvenient facts in order to maintain an unequivocally pro-war position. The dossiers of satellite photos that were being displayed a few months ago gave a pretty clear impression that the US government knew that Saddam was building weapons of mass destruction and where he was building them. Moreover, the information coming out of the Administration strongly implied that Saddam was well on the way to getting nuclear weapons.

It now seems pretty clear that this was a misleading picture. Saddam may well have some stocks of botulin toxin and nerve gas stashed away, and perhaps even a carefully hidden lab or two, but it’s becoming evident that there is no nuclear weapons program currently in operation and probably no large-scale chemical or biological program. The sites that were displayed in the satellite photos have already been inspected and have turned up nothing. Some mustard gas shells have been found and more may show up, but if we knew six months ago what we know now, it’s doubtful that weapons of mass destruction would have formed the basis of a plausible casus belli.

In these circumstances, phrases like ‘objectively pro-Saddam’ are being used pre-emptively in exactly the way described by Orwell, to silence those who might question the truthfulness of the core elements of the case for war.

The Economist argues in favor of the US rule of Chapter 11 bankruptcy under which firms in financial difficulties are encouraged to trade out of them. The argument seems plausible, but it doesn’t address the question of moral hazard. Firms will be more willing to take on excessive debt if there’s a possibility of repudiating it and surviving.

Another point of interest is that survival rates for Chapter 11 seem to vary widely. Airlines seem to do OK, but very few of the tech and telecom companies that have entered Chapter 11 have ever emerged. With dotcoms, the problem was often one of finding enough assets to pay a liquidator. I have the impression that, overall, the survival rate of firms going into Chapter 11 is falling, but that’s only an impression.

Unqualified Offerings from Jim Henley. Thoughtful commentary on US politics from a left-liberal perspective. I’ve also added Manas whom I mentioned a few days ago.

Update Jim Henley writes in the comments thread to inform me that he is a libertarian and not a ‘left-liberal’. Sorry about that !

It just goes to show I shouldn’t try to infer a complete political position from arguments on a few key issues. Still even on the basis of the little I’ve read of Jim’s blog I can say that I wish there were more libertarians like him.

Confusion regarding Iraq and the Middle East is everywhere. Scuds from North Korea hidden under a load of cement are apparently a legitimate cargo. The WashPost runs a story quoting Administration officials saying Saddam has given VX gas to Al-Qaeda and it’s already on its way to the West. If correct, this would certainly justify war, but would also give it a ‘shutting the stable door’ quality. The next day, the report seems to be little more than a rumor.

Meanwhile the Iraqi declaration and the US response are puzzling in the extreme. In the standard warblogger scenario, the declaration was the trigger. Once it came out, the US would produce the evidence to show Iraq was lying and the war would be under way. The peaceful resolution scenario was that Iraq would ‘fess up and destroy its weapons. Instead, Iraq is denying everything but the US is in no hurry to prove that Saddam is lying.

Today’s NYT quotes US officials as saying that the report fails to account for stocks of WMDs that were already located by the last round of inspections. If this claim stands up, it would make a pretty strong case for declaring Iraq in material breach. But, as the NYT says, it’s hard to prove a negative. What I find really bizarre is this:

The second [option] is to continue with the inspections, and to aid inspectors with intelligence that would guide them to suspect locations. But Mr. Fleischer said earlier this week that the inspectors would receive no information that revealed the sources and methods used to collect them.

How serious a threat can Saddam be if it’s more important to protect any and all intelligence sources than to produce the evidence that would justify his overthrow. You can imagine cases where the US would put sources first – for example a highly-placed mole in Saddam’s entourage. But the kind of evidence that’s been hinted at so far is nothing like this – it’s routine surveillance using satellites, phone intercepts etc. Kennedy compromised sources far more sensitive when he produced the photos proving the Russians were building missiles on Cuba.

The only interpretation that makes sense is that, despite all the dossiers that were waved about a few months ago – including satellite images of ‘suspect’ sites – the Administration doesn’t really have anything beyond some suspicious purchases.

Blix will apparently give his assessment of the Iraqi document next Thursday, My guess is that he won’t give much support to a ‘material breach’ finding and will instead call for more inspections. That puts any real action off until the first inspection report, due on January 26 as I recall.

There’s still a significant chance that Saddam will be nailed on a clear falsehood in the declaration or that inspectors will turn up something damning. And there’s an outside possibility that the alleged links to Al-Qaeda will pan out. But it’s becoming more and more likely that neither terrorist links nor WMDs will be solid enough evidence to justify an invasion.

What’s left of the case for war is the obvious fact that Saddam is an evil dictator and a menace to peace in the Middle East. The problem is that a war based on this argument must be conducted very differently from one based on evidence that Saddam is aiding terrorists or hoarding WMDs. Overthrowing one oppressive dictator in a region full of them is not a sustainable policy. Unfortunately many of the dictators are US allies, just as Saddam was 20 years ago. And the oppressive Middle Eastern regime that arouses the most resentment is that operated in Palestine by America’s closest ally. The fact that the same ally operates the only real domestic democracy in the region makes things even trickier.

Quite frankly, I don’t believe the US Administration is capable of managing a war for democracy in the Middle East. But if they show that they can, for example by demanding an immediate start to the dismantling of Israeli settlements in Palestine, and dumping their friendly dictators, I’ll be the first to cheer them on.

Occam’s Razor suggests adopting the simplest solution. The fact that productivity growth is normally procyclical (that is, it goes up during booms and down during recessions) is something of a puzzle. Given a fixed capital stock, if employment declines during a recession, the capital stock per worker increases and therefore labour productivity should rise, not fall. Declining labour productivity during recessions has been explained in a number of ways, but the most popular is ‘labour hoarding’. This is the idea that firms do not sack workers when demand slows down because there is some sort of implicit long-term contract, which includes the fact that the employees will stay on and contribute when demand picks up again. The big achievement of the 1990s was to destroy this sort of implicit contractual relationship, to the point where firms now engage in large-scale layoffs even when they are profitable. Employees, particularly younger ones, have learned the lesson that loyalty is for suckers. Hence, labour hoarding is no longer significant, and there is no reason to expect procyclical labour productivity, particularly in the aftermath of a gigantic boom in capital investment.

This isn’t the only possible answer but it seems like a good one to me. It works in nicely with the Thatcher effect, which also yields a combination of weak or negative output growth with very strong productivity growth. The Thatcher effect arises when the lowest-productivity workers are sacked (or plants are closed) raising the average automatically.

The blogosphere as a whole comes out of the Lott-Thurmond affair looking pretty good. The normal practice, when someone prominent on the political right praises segregationism, is to play it down and pretend nothing happened. And woe betide anyone on on the left who wants to make an issue of it, especially if they are foolish enough to use the dreaded “R Word”. The mainstream media played this one true to form, burying Lott’s remark that it would be a good thing if Thurmond’s 1948 Dixiecrat campaign had been successful.

It was only after bloggers, and particularly ‘right-wing’ bloggers such as Glenn Reynolds at Instapundit started piling on to Lott, that the media decided there was even a story here. Now it looks as if Lott’s career has suffered severe, and possibly fatal damage. Moreover, it has even become possible to state the obvious truth, that large sections of the US Republican party have prospered by pandering to racist sentiment, exactly as Lott did. [As I've observed previously, despite some occasional mis-steps like an appearance at Bob Jones university, Bush is genuinely non-racist, but so far he represents the exception rather than the rule].

For those who want to stick to an image of the blogosphere as a haven for right-wing bigotry, there’s always Mark “Not the truth, not the whole truth and everything but the truth” Steyn, who manages to devote 700 words to praise for Thurmond’s sexual promiscuity without mentioning his racist politics.

And I should observe that the same things happen on the left. Although the parallel is not perfect, Steven Den Beste points to an anti-US screed, headlined The American administration is a bloodthirsty wild animal, and published in the Daily Telegraph of all places, by former “Angry Young Man”, Harold Pinter, who has previously opposed not only the war in Afghanistan but also Kosovo and Bosnia, and advocated the release of Slobodan Milosevic. The natural reaction of leftists is to ignore such embarrassments, but this is a mistake. The view, exemplified by Pinter and Noam Chomsky, that everything the US does is always wrong undermines those who want to support some US actions and oppose others just as much as the “USA all the way!” line taken by so many on the right.

[Orwell] tirelessly exposed the argument that one should refrain from attacking ‘X’ (the goodies) because this ‘objectively’ helps ‘Y’ (the baddies). This common argument—which is in essence what Revel calls devotion—is ‘only a short step to arguing that the suppression and distortion of known facts is the highest duty of a journalist’, Orwell wrote. ‘It is a tempting manoeuvre and I have used it myself more than once*, but it is dishonest’. What’s more, it doesn’t work: ‘if you lie to people, their reaction is all the more violent when the truth leaks out, as it is apt to do in the end’.

* (For example, when he asserted during WWII that pacifists were ‘objectively pro-Fascist’)

Update The BlogGeist strikes again. Jim Henley made the identical point, a bit before me, with more links. So far, the response has been a solid piece of Steynwalling.

Tim Blair’s latest column is a fisking of a piece in the Guardian by Rod Liddle. Tim intersperses paras by Liddle (in italics) with his own comments. Perhaps this has been done in print before, but I haven’t seen it.

I’m not sure that this works. In the debate on fisking that took place on this blog a few months ago, the point was made that the potential for unfair distortion was offset by the standard practice of linking to the target article. This is more difficult in print – Tim mentions that the article appeared “on Tuesday” but the Oz doesn’t give a URL.

It doesn’t help that this inaugural print fisking is not one of Tim’s better efforts, being made up more of petty quibbles than of either reasoned responses or sharp putdowns. A fairly typical extract

The Prime Minister, John Howard, seems to suggest that his country will invade any Asian country it suspects of harbouring terrorists.

Howard suggested nothing of the sort. He said: “If you believed that somebody was going to launch an attack against your country, either of a conventional kind or of a terrorist kind, and you had a capacity to stop it and there was no alternative other than to use that capacity, then of course you would have to use it.”

I mentioned in a recent post that “we are all Keynesians now”, in the sense of accepting that governments will run deficits during recessions and surpluses during slumps to stabilise the economic cycle. While this is broadly true, the natural corollary, that, over the course of the economic cycle, the budget should balance, implying a stable ratio of public debt to GDP, is much more controversial.

Broadly speaking, social democrats accept this position in principle, although they lean towards some tolerance of deficits. On the other side of politics, opinion is sharply divided between hawks who want to wipe out public debt and ‘supply-siders’ who favor continuous budget deficit. Ken Davidson points out the many flaws in Costello’s advocacy of zero debt.

Meanwhile Anthony York at Salon reports that Stephen Friedman’s nomination as chair of Bush’s National Economic Council is running into opposition from ‘conservative opponents of balanced budgets’ . This description would have been an oxymoron before 1980, but it is now apparently routine. I was surprised, for example, to read that the Cato Institute opposes balanced budgets

Chris Edwards, director of fiscal policy studies at the libertarian Cato Institute, was not overly enthusiastic about the possibility of Friedman heading the council. But, he said, “Even if he comes in with a balanced budget philosophy, if he can be a team player, then I see no problem.

BTW, ‘Team player’ is a term that could benefit from analysis. As used here, it seems to mean someone willing to repudiate their own views for the sake of a prestigious entry on the vita.

Manas (‘spicy hot’ in the main East Timorese language) is a new Ozplogger, focusing so far mainly on East Timor. As with other female bloggers, she includes a picture* (more than one, actually). The text looks promising so far.

*I don’t quite know why male bloggers are so shy. In my case, it’s just that I’m too lazy to make the necessary changes to my template – I have a picture on my website here. Actually, in view of the many comments on my beard, it’s not surprising that other males have been coy.

CalPundit has an easy introduction to Keynesian economics, pointing out that ‘we are all Keynesians now’.

To clarify this, nearly everyone accepts that the public sector acts, and should act, as an economic stabiliser by allowing tax revenues to decline and expenditure to rise during recessions (and the opposite during booms). Most economic policymakers are willing to supplement the automatic stabilisation arising from the tax-transfer system with some discretionary fiscal stimulus during recessions.

I didn’t get as skeptical a reaction as I expected to my prediction of no war with Iraq, but I thought I’d try and explain my reasoning a bit further anyway. The short route to war would arise if it could be proved that Iraq’s declaration on WMDs contained significant falsehoods. Obviously, this would be true if the declaration failed to account for stocks of germ and chemical weapons that have been found in previous rounds of inspections. But precisely because this is obvious, it was never likely that the Iraqi government would be so stupid. The table of contents of the declaration, available from the NYT as a PDF file includes a chapter of 22 pages headed “Unilateral destruction of chemical agents, weapons and precursors”.

A direct route to war would also arise if the US could prove that the Iraqis were lying, by pointing the inspectors to sites where weapons programs were underway. The dossiers that were being waved about a few months ago seemed to imply that the US Administration had direct evidence of particular sites being used for WMD production (remember all those grainy satellite photos). But now it appears that this was basically bluff. There could be a surprise in the next few days, but otherwise I think we have to conclude that the Administration doesn’t have the goods on Saddam

Several commentators have already raised the possibility that the US will invade Iraq anyway, either repudiating the UN resolutions or adopting some strained interpretation, such as attacks on planes enforcing the no-fly zone. The difficulty with this is the one that led Bush to go to the UN in the first place. No state in the region wants to be the springboard for an attack that will take place while inspectors are on the job in Iraq. Tony Blair might be willing, but he would almost certainly find it impossible to carry the British cabinet with him, and even Australia might refuse.

The best option for the US, on this analysis is to wait and see what the inspectors turn up. So far they’ve been tackling the obvious options, but with larger numbers they’ll be able to look harder. And some scientist may defect or leak a relevant secret. There was a report a week or so ago, that they’d found some shells with precursors for mustard gas that were supposed to have been destroyed, but nothing much has come of this as yet, and the coverage implied that this it an oversight rather than a carefully concealed weapons cache.

My guess, however, is that there may not be too much to leak. As far as I can tell, a nuclear weapons program can’t be hidden easily, and the last one was destroyed pretty thoroughly, so I’d guess that Iraq has given up on this line. As regards chemical and biological weapons, the rational thing for the Iraqi government would have been to destroy all the stocks, and have some trusted scientists memorise the recipes. It’s looking increasingly likely that this is what they’ve done. By contrast, the US Administration seems to have worked on the assumption that Saddam is crazy.

If my analysis is right, the rational policy on Iraq’s WMD programs from this point on is continued containment, keeping inspectors and monitoring equipment in place indefinitely. The other plausible case for war, based on liberation of the Iraqi people from Saddam’s dictatorship, will have to wait for a more comprehensive approach to the Middle East including an imposed resolution to the Israel-Palestine problem.

In private, administration officials concede that there is no single piece of intelligence that can undermine the Iraqi declarations.

Instead, they say, there are only patterns of Iraqi purchases, the scattered reports of defectors and Mr. Hussein’s own history of making “final” declarations that eventually proved to be neither final nor true.

Based on this and the reasoning I’ve set out previously, I’m going to go out on a limb and predict that there will be no war with Iraq. There are a lot of uncertainties, and I could easily end up with egg on my face, but that’s what blogging’s all about.